Fonterra Retail Bonds Oversubscribed By 267%

Media Release
5 February 2009

Fonterra Announces Firm Allocations Of Nz$800 Million Of Retail Bonds
– Offer Oversubscribed By 267% –

Fonterra Co-operative Group today announced a firm allocation of NZ$800 million to NZX participants and institutional investors for the company’s offer of senior unsecured bonds which opens on Monday, February 9 after receiving applications significantly in excess of this amount. There will be no public pool.

Fonterra CEO, Andrew Ferrier, said the company was very pleased with the strong response to the offer from such a wide range of NZX primary market participants and institutional investors. The $800 million offer – an oversubscription of 267% of the original benchmark announced by Fonterra earlier this week – is for a six-year maturity, paying a minimum coupon of 7.75% per annum.

“We’ve had a great response from the New Zealand investor base, which reflects the confidence people have in Fonterra and our business.”

Mr Ferrier said that to obtain an investment statement and subscribe for the bonds, investors should contact their financial advisor, the Joint Lead Managers or either of the Co-Managers. The Joint Lead Managers are ANZ, part of ANZ National Bank Limited, and BNZ Capital, a division of Bank of New Zealand; the Co-Managers are ABN AMRO Craigs Limited and First NZ Capital Securities Limited.

The minimum investment level is $5000 (5000 bonds at $1.00 each), with multiples of $1000 thereafter. The bonds carry credit ratings of AA- (AA minus) from Fitch Ratings and A+ (A plus) from Standard & Poor’s.

The interest rate will be finalised on March 9 and will be the higher of 7.75% or the aggregate of the applicable six year swap rate plus a margin of 3.40% on that date.

Application has been made to NZX for permission to list the bonds and all the requirements of NZX relating thereto that can be complied with on or before the date of this release have been duly complied with. However, NZX accepts no responsibility for any statement in the release.

The offer closes on Friday, March 6.

ENDS

About Fonterra

Fonterra is the world’s largest dairy exporter, with annual revenues of about NZ$17 billion*.

As New Zealand’s largest and truly multinational business, Fonterra trades in 140 countries.

Our portfolio includes dairy ingredients, liquid and powdered milks, cultured foods and yoghurts, butter, cheese and specialty foodservices products.

Our brands include Anchor, Anlene, Anmum, Fresh n’ Fruity, Mainland, Peters, Brownes, Tip Top, and Chesdale.

* Fonterra reported revenues of NZ$19.5 billion for 14 months ended 31 July 2008.

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